finance 0.0.1 → 0.1.0

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@@ -0,0 +1,165 @@
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+ GNU LESSER GENERAL PUBLIC LICENSE
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+ Version 3, 29 June 2007
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+ Copyright (C) 2007 Free Software Foundation, Inc. <http://fsf.org/>
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+ This version of the GNU Lesser General Public License incorporates
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+ Library.
data/README CHANGED
@@ -1,30 +1,74 @@
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- = ABOUT
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+ _finance_ - a library for financial calculations in Ruby.
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+
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+ = INSTALL
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+
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+ $ sudo gem install finance
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+
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+ = OVERVIEW
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+
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+ == GETTING STARTED
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+
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+ >> require 'finance'
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+
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+ == AMORTIZATION
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+
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+ You are interested in borrowing $250,000 under a 30 year, fixed-rate loan with a 4.25% APR.
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+
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+ >> rate = Rate.new(0.0425, :apr, :duration => 30.years)
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+ >> amortization = 250000.amortize(rate)
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+
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+ Find the standard monthly payment:
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- The goal of the _finance_ library is to provide Ruby implementations
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- of common financial formulas, with a function syntax similar to most
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- modern spreadsheet programs. As the project matures, consideration will
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- also be given to providing useful, but more advanced functions, which
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- may not be suitable for a spreadsheet environment but are useful when
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- programming.
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+ >> amortization.payment
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+ => DecNum('-1229.91')
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+
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+ Find the total cost of the loan:
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+
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+ >> amortization.payments.sum
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+ => DecNum('-442766.55')
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+
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+ How much will you pay in interest?
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+
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+ >> amortization.interest.sum
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+ => DecNum('192766.55')
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+
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+ How much interest in the first six months?
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+
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+ >> amortization.interest[0,6].sum
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+ => DecNum('5294.62')
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+
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+ = ABOUT
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  I began developing _finance_ while writing a Ruby script for analyzing
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  mortgages. I couldn't find an existing resource for these tools, I am
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  hoping to save other folks some time by releasing what I have as a gem.
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- = EXAMPLES
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+ If you have used _finance_ and find it useful, I would enjoy hearing
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+ about it!
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+ = FEATURES
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+ Currently implemented features include:
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- = INSTALL
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+ * Fixed-rate mortgage amortization (30/360).
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+ * Interest rates
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+ * Various cash flow computations, such as NPV, IRR, and sum.
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+
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+ Planned features include:
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- + $ sudo gem install finance +
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+ * Adjustable rate mortgage amortization.
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+ * Payment modifications (i.e., how does paying an additional $75 per
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+ month affect the amortization?)
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+ * Balloon payments.
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+ * Support for amortization methods other than 30/360.
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  = RESOURCES
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- Source code and bug tracking is available via github:
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+ This gem and related documentation is available through
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+ RubyGems[https://rubygems.org/gems/finance].
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69
 
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- Project Page:: + http://github.com/wkranec/finance +
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- Repository:: + git://github.com/wkranec/finance.git +
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+ Source code and bug tracking is available via
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+ github[http://github.com/wkranec/finance].
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72
 
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  = COPYRIGHT
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@@ -0,0 +1,91 @@
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+ require 'cashflows'
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+
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+ class Period
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+ attr_accessor :payment
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+ attr_accessor :principal
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+ attr_accessor :rate
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+
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+ # Return the remaining balance at the end of the period.
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+ def balance
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+ @principal + @payment + self.interest
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+ end
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+
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+ def initialize(principal, rate, payment)
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+ @principal = principal
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+ @rate = rate
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+ @payment = payment
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+ end
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+
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+ # Return the interest charged for the period.
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+ def interest
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+ (@principal * @rate).round(2)
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+ end
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+ end
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+
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+ class Amortization
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+ attr_accessor :balance
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+ attr_accessor :duration
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+ attr_accessor :payment
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+ attr_accessor :periods
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+ attr_accessor :principal
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+ attr_accessor :rate
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+
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+ def compute(balance, rate)
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+ duration = @duration - @periods.length
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+ @payment = Amortization.payment balance, rate.monthly, duration
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+
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+ rate.duration.times do
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+ if @payment > @balance
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+ @payment = @balance
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+ end
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+
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+ period = Period.new(@balance, rate.monthly, @payment)
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+ @periods << period
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+ @balance = period.balance
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+
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+ if @balance.zero?
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+ break
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+ end
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+ end
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+ end
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+
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+ def initialize(principal, rate)
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+ @principal = principal
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+ @balance = principal
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+ @rate = rate
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+ @duration = rate.duration
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+ @periods = []
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+
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+ compute(@balance, @rate)
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+
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+ # Add any remaining balance due to rounding error to the last payment.
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+ unless @balance.zero?
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+ @periods[-1].payment -= @balance
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+ @balance = 0
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+ end
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+ end
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+
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+ def inspect
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+ "Amortization.new(#{@principal}, #{@rate}"
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+ end
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+
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+ def interest
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+ @periods.collect { |period| period.interest }
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+ end
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+
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+ # Return the periodic payment due on a loan, based on the
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+ #{http://en.wikipedia.org/wiki/Amortization_calculator amortization process}.
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+ def Amortization.payment(balance, rate, periods)
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+ -(balance * (rate + (rate / ((1 + rate) ** periods - 1)))).round(2)
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+ end
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+
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+ def payments
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+ @periods.collect { |period| period.payment }
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+ end
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+ end
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+
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+ class Numeric
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+ def amortize(rate)
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+ Amortization.new(self, rate)
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+ end
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+ end
@@ -0,0 +1,33 @@
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+ module Cashflow
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+ # Return the {http://en.wikipedia.org/wiki/Internal_rate_of_return
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+ # internal rate of return} for a given sequence of cashflows.
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+ def irr(iterations=100)
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+ rate = 1.0
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+ investment = self[0]
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+ for i in 1..iterations+1
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+ rate = rate * (1 - self.npv(rate) / investment)
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+ end
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+ rate
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+ end
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+
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+ # Return the {http://en.wikipedia.org/wiki/Net_present_value net present value} of a sequence of cash flows given
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+ # the discount rate _rate_.
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+ def npv(rate)
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+ total = 0.0
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+ self.each_with_index do |cashflow, index|
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+ total = total + cashflow / (1+rate) ** index
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+ end
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+ total
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+ end
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+
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+ def sum
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+ self.inject(:+)
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+ end
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+
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+ def xirr
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+ end
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+ end
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+
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+ class Array
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+ include Cashflow
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+ end
@@ -1,3 +1,8 @@
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+ require 'amortization'
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+ require 'cashflows'
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+ require 'rates'
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+ require 'timespan'
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+
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  # The *Finance* module adheres to the following conventions for
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  # financial calculations:
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  #
@@ -7,19 +12,6 @@
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  # * *rate* represents the interest rate _per period_.
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  module Finance
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14
 
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- # Return the internal rate of return for a given sequence of cashflows.
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- #
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- # References:
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- # * http://en.wikipedia.org/wiki/Internal_rate_of_return
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- def Finance.irr(cashflows, iterations=100)
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- rate = 1.0
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- investment = cashflows[0]
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- for i in 1..iterations+1
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- rate = rate * (1 - npv(rate, cashflows) / investment)
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- end
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- rate
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- end
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-
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  def Finance.payments(principal, rates)
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  p_total = rates.inject(0) { |sum, n| sum + n[0] }
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  p_current = 0
@@ -63,28 +55,6 @@ module Finance
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  payments
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  end
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- # Return the periodic payment due on a loan, based on the amortization
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- # process.
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- #
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- # References:
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- # * http://en.wikipedia.org/wiki/Amortization_calculator
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- def Finance.pmt(principal, rate, periods)
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- principal * (rate + (rate / ((1 + rate) ** periods - 1)))
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- end
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-
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- # Return the net present value of a sequence of cash flows given
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- # the discount rate _rate_.
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- #
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- # References:
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- # * http://en.wikipedia.org/wiki/Net_present_value
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- def Finance.npv(rate, cashflows)
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- total = 0.0
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- cashflows.each_with_index do |cashflow, index|
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- total = total + cashflow / (1+rate) ** index
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- end
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- total
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- end
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-
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  # Return the number of periods needed to pay off a loan with the
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  # given payment.
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  def Finance.nper(payment, rate, principal)
@@ -0,0 +1,89 @@
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+ require 'rubygems'
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+ require 'flt'
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+
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+ class Rate
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+ attr_accessor :duration
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+ attr_accessor :periods
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+ attr_accessor :nominal
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+
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+ # Alias method for *effective*.
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+ def apr=(apr)
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+ self.effective = apr
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+ end
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+
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+ def apr
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+ self.effective
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+ end
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+
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+ # Alias method for *effective*.
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+ def apy=(apy)
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+ self.effective = apy
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+ end
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+
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+ def apy
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+ self.effective
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+ end
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+
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+ def effective=(rate)
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+ unless @periods == Flt::DecNum.infinity
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+ @nominal = @periods * ((1 + rate) ** (1 / @periods) - 1)
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+ else
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+ @nominal = Math.log(rate + 1)
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+ end
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+ end
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+
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+ def effective
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+ unless @periods == Flt::DecNum.infinity
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+ (1 + @nominal / @periods) ** @periods - 1
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+ else
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+ @nominal.exp - 1
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+ end
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+ end
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+
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+ def initialize(rate, type, opts={})
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+ # Make sure the rate is a decimal.
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+ unless rate.class == Flt::DecNum
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+ rate = Flt::DecNum rate.to_s
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+ end
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+
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+ # Set the compounding interval.
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+ compounding = opts.fetch(:compounds, :monthly)
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+
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+ translate = {
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+ :annually => Flt::DecNum(1),
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+ :continuously => Flt::DecNum.infinity,
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+ :daily => Flt::DecNum(365),
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+ :monthly => Flt::DecNum(12),
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+ :quarterly => Flt::DecNum(4),
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+ :semiannually => Flt::DecNum(2)
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+ }
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+
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+ if translate.has_key? compounding
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+ @periods = translate.fetch compounding
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+ elsif compounding.kind_of? Numeric
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+ @periods = Flt::DecNum compounding.to_s
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+ end
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+
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+ # Set the rate in the proper way, based on the value of :type:.
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+ if %w{apr apy effective}.include? type.to_s
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+ self.effective = rate
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+ else
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+ @nominal = rate
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+ end
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+
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+ # Set the remainder of the attributes provided in :opts:.
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+ opts.each do |key, value|
76
+ unless key == :compounds
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+ send("#{key}=", value)
78
+ end
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+ end
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+ end
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+
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+ def inspect
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+ "Rate.new(#{self.apr.round(6)}, :apr)"
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+ end
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+
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+ def monthly
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+ (self.effective / 12).round(6)
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+ end
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+ end